Health Insurance Weighing The Options Paul Garver Dan Ritchie Carol Thornton

Presentation Topics Types of Insurance Types of Insurance Recommendations for Varying Circumstances Recommendations for Varying Circumstances Future Trends Future Trends

Types of Insurance Private Health Care Plans Fee-for-Service (or Traditional Health Insurance) Fee-for-Service (or Traditional Health Insurance) HMO (Health Maintenance Organizations) HMO (Health Maintenance Organizations) PPO (Preferred Provider Organizations) PPO (Preferred Provider Organizations) Government-Sponsored Health Care Plans Medicare Medicare Medicaid Medicaid

Things to Keep in Mind “You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially.” “You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially.” Make sure you know what your insurance does and does not pay for—you don’t want any surprises. Make sure you know what your insurance does and does not pay for—you don’t want any surprises. “Each [health insurance plan] has pros and cons. There is no one ‘best’ plan.” “Each [health insurance plan] has pros and cons. There is no one ‘best’ plan.” “Choose the plan that meets both your needs and your budget. For most people, this means deciding which plan is worth the cost.” “Choose the plan that meets both your needs and your budget. For most people, this means deciding which plan is worth the cost.”

Which Plan is Right for Me? Perfect plan depends on personal needs Perfect plan depends on personal needs Scenario Scenario Three main considerations Three main considerations Costs Costs Needs Needs Quality Quality

What are you willing to pay? Look for things such as: Look for things such as: Monthly/annual costs Monthly/annual costs Deductibles Deductibles Cost of covering major expenses Cost of covering major expenses Costs of using non-plan doctors Costs of using non-plan doctors Co-payments Co-payments Costs for each participant Costs for each participant Medicine costs Medicine costs Time and effort costs Time and effort costs Etc... Etc...

What are your needs? Think of things such as: Think of things such as: How often do I (or my kids) go to the doctor How often do I (or my kids) go to the doctor What are my prescription needs What are my prescription needs When do I usually go to the hospital When do I usually go to the hospital Is our family growing (or might it) Is our family growing (or might it) Is location important Is location important How much variety will I want/need How much variety will I want/need What permissions will be required What permissions will be required

What is the quality of this plan? Find out things such as: Find out things such as: How are they rated (independent orgs.) How are they rated (independent orgs.) What do friends or co-workers say What do friends or co-workers say What do the doctors think What do the doctors think Which doctors are included Which doctors are included

So which plan is right? Look at your situation: Look at your situation: What are you willing to pay for What are you willing to pay for What are your present and future needs What are your present and future needs What is the quality What is the quality

Current Trend in Healthcare Costs Americans spent $4358 per person on healthcare in Americans spent $4358 per person on healthcare in Switzerland next highest at $2853 per capita. Switzerland next highest at $2853 per capita. Recent Healthcare Cost Increases Recent Healthcare Cost Increases 12% in 2000, 13% in 2001, projected 14% in % in 2000, 13% in 2001, projected 14% in 2002 Large increases predicted through 2006 Large increases predicted through 2006 US employees pay average 17% of healthcare premiums. US employees pay average 17% of healthcare premiums. Companies have to do something. They cannot keep absorbing these rising costs.

Healthcare Cost Drivers New drugs, higher drug usage, rising prescription drug costs (rose 16% in 2001) New drugs, higher drug usage, rising prescription drug costs (rose 16% in 2001) Expensive new technologies and tests Expensive new technologies and tests Retiree health plans with an aging population Retiree health plans with an aging population Consolidating healthcare industries with declining corporate leverage Consolidating healthcare industries with declining corporate leverage Insatiable appetite for every medical test and treatment available Insatiable appetite for every medical test and treatment available

What can be done? Make the consumer more cost-sensitive and health- conscious. Pam Mendels, Treasury & Risk Management, July/August 2002 Make the consumer more cost-sensitive and health- conscious. Pam Mendels, Treasury & Risk Management, July/August 2002 A more patient-centered, choice-based finance system where consumers are more involved around healthcare decisions. Ben Cutler, President & CEO of Fortis Health. A more patient-centered, choice-based finance system where consumers are more involved around healthcare decisions. Ben Cutler, President & CEO of Fortis Health. Consumers should have more information, more direct financial stake through increased cost sharing. David Kaplan, Principal Management Consultant, Tillinghast-Towers Perrin. Consumers should have more information, more direct financial stake through increased cost sharing. David Kaplan, Principal Management Consultant, Tillinghast-Towers Perrin. If a company puts the employee more in charge of the cost of health care, that person will make more healthy, cost-effective decisions. Pam Mendels, Treasury & Risk Management, July/August 2002 If a company puts the employee more in charge of the cost of health care, that person will make more healthy, cost-effective decisions. Pam Mendels, Treasury & Risk Management, July/August % of today’s companies are looking at some kind of “Consumer-driven” Healthcare

What is Consumer Driven Healthcare? High-Deductible Medical Plan High-Deductible Medical Plan Healthcare Spending Account Healthcare Spending Account Money (less than deductible amount) allocated for employees healthcare expenses. Money (less than deductible amount) allocated for employees healthcare expenses. Unused amount rolled-over at end of year. Unused amount rolled-over at end of year. Educational Resources Educational Resources Establish coalition where employers share health provider information and establish best practices. Establish coalition where employers share health provider information and establish best practices. Preventative Services Preventative Services Identify those facing serious health risks and give them coaching to improve their chances to stay well. Identify those facing serious health risks and give them coaching to improve their chances to stay well. Wellness Programs Wellness Programs Plans to keep employees healthy and avoid illnesses. Plans to keep employees healthy and avoid illnesses.

So What? At least in near future, we will be absorbing more of the healthcare costs. At least in near future, we will be absorbing more of the healthcare costs. We should be more informed on healthcare issues to make more cost- effective choices. We should be more informed on healthcare issues to make more cost- effective choices. Know what plans your company has now and will that change in the next few years. Know what plans your company has now and will that change in the next few years. Be prepared to start negotiating your healthcare charges. Be prepared to start negotiating your healthcare charges. Take an active part in your healthcare!